Rousmaniere: What RAND Says About Work Comp

Santa Monica-based RAND often studies the California workers’ comp system. In September, it issued a report on the state of workers’ comp nationwide.

Let’s focus on its key findings, prepared for the National Institute of Occupational Safety & Health, which paid for the study. The formal objective of the report is to suggest topics of future research by NIOSH. For the purposes of our industry, the report is a broad, albeit incomplete, critique of policies and practices of how the United States manages three million work injuries per year.

The report’s overriding concern is to reduce the risks of injury and lasting disability. It got this right. Our fundamental role, collectively, is to manage these risks.

I’ll quote verbatim a few findings:

“Safety promotion practices have been somewhat successful, but create complex claiming incentives.” Reductions in reported work injuries, RAND says, need to be balanced with what the authors make clear is a real risk of under-reporting and under-claiming.

After reading many studies, I concluded a few years ago that roughly half of work injuries needing medical attention fail to result in a claim. This does not mean that the reported benefit costs (estimated at $61.9 billion in 2016) are half of what they actually are. The great majority of injuries that don’t trigger a claim probably are light.   

But RAND is right to be concerned. There are no simple solutions to under-claiming. The ultimate driving force is not regulation but the quality of culture of workforce relationships with employers and insurers. An unhealthy culture not only distorts claiming, but also drives up fraud and abuse of all kinds, and even damages the performance of insurers.    

 “Challenges remain in vocational rehabilitation and return to work.”  The authors were interested in what happens to injured workers over the long run, after their claim is closed. Private sector players don't focus on this long-term impact because they can’t see it. The claim ends and that’s it.  But researchers at RAND and elsewhere have been trying for some time to estimate the impact on earnings, labor market participation, and use of other safety nets such as SSDI.

The study does not address disability and return to work metrics — what they are and could be. This is a peculiar gap in research, state oversight and private sector leadership. We talk as if key metrics exist for return to work when they do not. No one publishes the return to work rates of injured workers. No one reports on the median days on work disability or speed of recovery.  The campaign to improve medical care is premised, ironically, on the idea that work recovery will improve when care improves.

“Benefit adequacy is insufficient…. Societal costs of work-related injuries are not fully covered by workers’ compensation.” The authors write, “Cost spillovers from workers’ compensation to other social insurance programs, such as Social Security Disability Insurance (SSDI) and Medicare, place additional strain on those programs and reduce incentives for worker safety.” 

“System complexity is a drag on performance.” To reduce complexity, look to the states. But the states appear to accommodate more complexity. The authors cite “resource constraints” on states to address the problem. The real cause of complexity, however, is the piecemeal way in which state houses try to manage their systems. In my years in the industry, I have yet to read an in-depth, state-generated analysis of system performance. 

“Occupational and general health care are not well coordinated.” Michael Dworsky, a co-author of the report, told me that they found among stakeholders a broad consensus that there should be better coordination between medical care for work-related and non-work-related conditions. The shared concern is how personal health conditions influence injury outcomes. 

The report dwells on medical care — how it performs now, how it can be improved. The authors write that medical “cost-control measures are imperfect and may reduce quality and access to care.” Also, “Parties disagree on the effectiveness of evidence-based guidelines.”

“Problems remain in disability determination.” The authors say that too much attention is given to “clinical outcomes,” and not enough to functional limitations.

The authors, Michael Dworsky and Nicholas Broten, were selective in whom they interviewed. The authors are more interested in the injured worker’s experience than to that of private sector players. Given their grantor, NIOSH, this is reasonable. Employers and insurers, for instance, rarely show up. RAND largely ignores the question of system costs. And it glosses over the critical functions of insurance and self-insurance.

And I sense a reluctance to address the virtually complete silence of states on the major issues of system performance. One can count on one hand the number of states which engage in serious reviews of their system, Few studies; no special commissions. NIOSH would make a costly mistake if it thinks it can influence workers’ comp if it cannot induce states, perhaps by collaborative research, to pay more attention to the long term.    

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